Asset write-downs and lower commodity prices hit Gulf’s biggest listed firm
Profits at petrochemicals giant Saudi Basic Industries Corporation (Sabic) fell by 59 per cent in 2009, despite an increase in overall sales volumes.
Sabic reported a net profit of SR9.1bn ($2.4bn) for 2009, down from SR22bn in 2008. Revenues at the company, the largest publicly listed firm in the region, fell by 41 per cent from SR48.1bn in 2008 to SR28.4bn the following year.
The volume of sales increased in 2009, with output topping 59 million tonnes compared with 46 million tonnes in 2008. However, a sharp drop in commodity petrochemical prices in the first half of 2009, and the company’s decision to write down the value of some of its assets in the first quarter of the year, hit overall profits.
Sabic reported a loss of SR973m in the first quarter of 2009, largely due to a SR1.18bn writedown of assets relating to plant closures and its 2007 purchase of the US’ GE Plastics. Falling prices for petrochemicals also added to losses.
The situation gradually improved during 2009, with the company reporting a net profit of SR1.8bn in the second quarter and SR3.6bn in the three months to 30 September. Sabic earned SR4.6bn between October and December, an increase of 26 per cent over the preceding three months.
An improvement in commodity prices and an increase in output through new production lines in Saudi Arabia and China will boost revenues in 2010, said Prince Saud bin Abdullah bin Thenayan al-Saud on 19 January.